In this guide9 sections
Labor Code §3700 requires every California employer except the state to secure workers’ compensation coverage, either by buying insurance from an authorized carrier or by getting the state’s permission to self-insure. It applies even if a business has just one employee. If your employer skipped coverage and you’re hurt on the job, you can still get benefits through the state’s Uninsured Employers Benefits Trust Fund (UEBTF), and you may also be able to sue the employer in court.
Key takeaways
- Every employer except the state must secure workers’ comp coverage through an authorized insurer or a state certificate to self-insure (§3700).
- California’s definition of “employee” includes workers who are lawfully or unlawfully employed, and anyone performing services for another is presumed to be an employee unless shown to be an independent contractor.
- Failing to secure coverage is a misdemeanor punishable by up to a year in county jail, a fine of at least $10,000 for a first conviction, or both, and the state can impose stop orders and per-employee penalties.
- If your employer is uninsured, you can file a workers’ comp case and bring the UEBTF into it, and you may also sue the employer, which loses key defenses in that lawsuit.
What Labor Code §3700 requires
Section 3700 says every employer except the state “shall secure the payment of compensation” in one of these ways:
- Insurance (§3700(a)). Coverage from one or more insurers authorized to write workers’ comp insurance in California.
- Private self-insurance (§3700(b)). A certificate of consent to self-insure from the Director of Industrial Relations, individually or as part of a group, after proving the ability to self-insure and pay claims.
- Public self-insurance (§3700(c)). Counties, cities, public districts and other political subdivisions may self-insure with a certificate, including through certain pooling arrangements.
There’s no minimum number of employees. A restaurant with two cooks, a contractor with one helper and a large corporation all have the same basic duty.
Who counts as an employee
Under Labor Code §3351, an employee is every person in the service of an employer under any appointment or contract of hire, express or implied, oral or written, “whether lawfully or unlawfully employed.” Since July 1, 2020, it also includes anyone who is an employee under the ABC test in Labor Code §2775. Section 3357 adds that a person performing services for another is presumed to be an employee unless shown to be an independent contractor or specifically excluded by law.
That means an employer can’t avoid coverage just by calling you a contractor or paying you in cash. See workers’ comp for independent contractors and workers’ comp for undocumented workers. Staffing arrangements have their own rules, covered in workers’ comp for temp and staffing agency workers.
Penalties for employers that don’t carry coverage
| Consequence | What the law provides | Source |
|---|---|---|
| Criminal charge | Misdemeanor: up to one year in county jail and/or a fine of up to double the premium that would have been due, but not less than $10,000. A later conviction carries a fine of triple the premium, but not less than $50,000. | §3700.5 |
| Stop order penalty | $1,500 per employee when the state issues a stop order | §3722(a) |
| Penalty for being uninsured more than a week in the prior year | The greater of twice the premium that would have been paid or $1,500 per employee | §3722(b) |
| Penalty after an injured worker’s claim | $2,000 per employee if the claim is not compensable; $10,000 per employee if it is | §3722(d) |
| Cap | Penalties under §3722 other than subdivision (b) are capped at $100,000 | §3722(f) |
Your options if your employer is uninsured
- A workers’ comp case with the UEBTF (§3715). You can file a claim with the Workers’ Compensation Appeals Board (WCAB), which can award the same benefits you would have received if your employer had been insured. If the employer doesn’t pay the award, the UEBTF pays it. The DWC’s UEBTF page notes there is no separate UEBTF application, but you must first file an application for adjudication of claim.
- A lawsuit against the employer (§3706). You may also sue the uninsured employer for damages in court, as if the workers’ comp system didn’t apply.
- Stronger footing in that lawsuit (§3708). The law presumes your injury resulted from the employer’s negligence, and the employer can’t rely on defenses like your own contributory negligence, assumption of the risk or a coworker’s negligence.
Section 3715 says the WCAB claim is available “in addition to” the court action, so many workers pursue both. A lawyer can help coordinate them.
A hypothetical example
Luis works for a small landscaping company and is paid in cash. He breaks his ankle when a mower slips on a slope. His boss tells him the company “doesn’t do workers’ comp” and offers $500.
Luis files a DWC-1 claim form anyway and checks whether the company had coverage. The search shows no policy. Luis files an application with the WCAB, has the employer served and asks the judge to join the UEBTF to his case. Separately, his lawyer evaluates a civil lawsuit, where the employer is presumed negligent and can’t blame Luis for the slip.
Steps to take
- Report the injury and file a DWC-1 claim form. Keep a copy and proof of delivery. Our post on the DWC-1 claim form explains the rules.
- Check whether your employer is insured. The DWC’s guide to UEBTF claims explains how to use the Workers’ Compensation Insurance Rating Bureau’s coverage search and the state self-insured list.
- Gather proof of employment. Pay stubs, W-2s, texts from your boss, schedules and coworker names all help show you were an employee.
- File with the WCAB and join the UEBTF. The DWC guide lists the forms, including a petition to join the UEBTF and personal service on the employer.
- Get medical care. Keep every medical record and bill.
For a plain-English overview, see what to do if your employer doesn’t have workers’ comp insurance.
Frequently asked questions
Does a business with only one employee need workers’ comp?
Yes. Section 3700 applies to every employer except the state, with no minimum number of employees. The Labor Code does exclude some narrow categories of workers, so check with a lawyer if your situation is unusual.
Can I get benefits if I’m undocumented?
Generally yes. The definition of employee in §3351 covers workers “whether lawfully or unlawfully employed.”
Does the UEBTF pay automatically?
No. The DWC warns that benefits are not paid automatically; you must file with the WCAB and follow the steps in its UEBTF guide.
Can I sue my uninsured employer and also get workers’ comp?
Generally yes. Section 3715 makes the appeals board claim available in addition to a court action under §3706. A lawyer can explain how recoveries in the two cases interact.
Can my employer fire me for filing a claim?
Firing or punishing you for filing a workers’ comp claim can violate Labor Code §132a. See workers’ comp retaliation.
Talk to a California workers’ comp lawyer
Employees First Labor Law represents workers exclusively in workers’ comp and employment cases. We offer free virtual consultations to review whether your employer was insured and which claims you may have. Contact us online or call (310) 853-3461.
This article is general information about California law as of 2026, not legal advice for your situation. Reading it does not create an attorney-client relationship.
